Condo Auction Is A Boon For Bargain Hunters

July 27, 1986|By Steve Kerch.

Anyone slinking around behind-the-scenes prior to a recent real estate auction at the Oak Park Club would have come away with just one nugget of insider information in the hunt for a possible bargain--chocolate covered peanuts.

``It was an early lunch,`` explained auctioneer Hugh Miller as he proffered the white paper bag of goodies. ``You`ll see the energy we burn up on stage up there when this gets started, so that`s why the peanuts. But you won`t tell them back home about this, will you?``

Back home for Miller is southern Indiana. The president of the National Auctioneers Association has been on the road a lot lately. Because the auction format has been skyrocketing in popularity as a way to market real estate, Miller`s skill at the gavel has made him in big demand everywhere from Beverly Hills to Oak Park.

Miller is not one for handing out hot tips. There`s nothing secret about the way the auctioneer proceeds.

``All of us are here to help you buy the unit you want to buy,`` he told the crowd of 115 bidders and another 100 spectators. ``So if you have any questions about the auction or the bidding or what`s going on up here, just ask.``

As it turned out, none of the 28 condominium buyers at this particular auction needed much of an edge. Each one walked away from the one-hour affair as the owner of a unit that originally would have sold for as much as $20,000 more than the auction price.

The price discrepancy didn`t bother Joel Zegart, president Chicago-based JBS & Associates Inc., a real estate consulting firm that specializes in auctions. The lure of a bargain is what makes an auction successful.

``Before this auction, the condominiums were on the market for two years,`` he said. ``The auction accomplished in one hour what the owners had set out to do in the early 1980s.``

Real estate experts say an auction, despite the low selling prices, has economic advantages for property owners who may find conventional marketing strategies more costly. It often doesn`t pay for a developer who must start a new project to have agents sitting around a slow selling property or for an owner who needs a quick sale to wait for a real estate firm to do the selling. The reason for the Oak Park auction didn`t matter to Mary McCannon. As the fourth successful bidder of the evening, she was able to snatch up her own apartment--originally listed at $49,000--for $29,000. Since her rent was around $485, she figured it would be cheaper to be an owner at the low price. McCannon`s one-bedroom unit was one of 17 sold in the South Mall Court condominiums at 1138-1150 Washington Blvd. in Oak Park. A renovated two-bedroom unit in that building fetched the highest price of the evening, $38,000, but the asking price had been $59,000.

Eleven additional condominiums were sold at Avenue Terrace, 214-222 South Oak Park Ave. All the units were sold ``absolute,`` meaning the owners agreed beforehand that the high bidder would receive the condos regardless of the bid.

The willingness of sellers to auction property ``absolute`` and to require no minimum opening bid are two of the keys to attracting a large supply of potential bidders. Stories of the ``steals`` that some bidders made at real estate auctions have also helped to draw curious crowds.

``Auctions are successful also because buyers set the price they are willing to pay for a property. This price, more than any appraisal, is the truest market value,`` said David Kaufman, chief executive of Kaufman Lasman Associates Inc., another Chicago-based real estate auction firm.

In three months in the spring of 1986, Kaufman Lasman conducted 20 real estate auctions across the United States where more than 1,000 properties worth more than $40 million were sold. At the largest auction in Houston, a crowd of more than 5,000 watched as 162 properties of all types were sold.

The three months of unprecedented activity at Kaufman Lasman underscores the auction`s popularity in real estate. So do the sellers who have gone the auction route: the Federal National Mortgage Association, the Federal Home Loan Mortgage Corp., the U.S. Dept. of Housing and Urban Development and private developers and savings institutions.

It is not only the big players on the seller`s side that are benefitting from auctions. Like the condo buyer who might grab a bargain, participants in multiple owner auctions are finding they can quickly sell just one or two properties by splitting auction costs with other owners.

``The auction was usually reserved for an owner who could sell numerous properties of the same type at one time,`` said Gordon Greene, president of Real Estate Auctions Inc., the auction conducting subsidiary of Chicago-based Sheldon F. Good & Co.

``However, the multi-owner auction has changed that. By combining

(different) sellers and properties at a single auction, we become market makers for the trading of real estate much like the trading specialists who work on the floor of the New York Stock Exchange,`` he said.